Disposed

M/S.Vaishnav Securities v. Sasi T. and Another

Kerala HC23 May 2024CRL.A/1092/2007

Case brief

AI extract

What is this about?

The High Court in criminal appeal quashed the acquittal of an accused under Section 138 of the Negotiable Instruments Act. The court held that the complainant failed to prove the existence of a legally recoverable debt as the power of attorney holder could not explain the transaction or produce accounts, and the accused successfully rebutted the statutory presumption of consideration.

What did the court decide?

Criminal appeal dismissed. The acquittal of the accused is restored.

M/S.Vaishnav Securities Vs Sasi T. and Another — Cheque Dishonour | Kerala HC (2024)

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Crl. Appeal No. 1092/2007

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR. JUSTICE JOHNSON JOHN

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THURSDAY, THE 23^RD DAY OF MAY 2024 / 2ND JYAISHTA, 1946

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CRL.A NO. 1092 OF 2007

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JUDGMENT DATED 26.05.2005 IN STC NO. 6079 OF 2003 OF THE JUDICIAL FIRST CLASS MAGISTRATE-II, PALAKKAD

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JUDGMENT DATED 20.09.2006 IN CRA NO.294 OF 2005 OF II ADDITIONAL SESSIONS JUDGE, PALAKKAD

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APPELLANT/RESPONDENT/COMPLAINANT:

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M/S.VAISHNAV SECURITIES

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REGD. OFFICE AT DOOR NO.3/570, MADATHIL POTTAYIL, COMPOUND, KERALASSERI VILLAGE, PALAKKAD,, REPRESENTED BY POWER OF ATTORNEY AGENT V.JAYAKUMAR, S/O.VELAYUDHAN EZHUTHASSAN, PADINJARE VEEDU, MARIKULAMMBU, KUDALLUR P.O. BY ADVS. SRI.K.P.BALAGOPAL

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RESPONDENT/APPELLANT/ACCUSED:

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1 SASI T., S/O. KRISHNAN, THENOLI HOUSE (THAIKANDI HOUSE), KANNANAM P.O.,, MOKERI, CHITARIPARAMBA, PANOOR (VIA), KANNUR.

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2 STATE OF KERALA REPRESENTED BY THE PUBLIC PROSECUTOR,, HIGH COURT OF KERALA, ERNAKULAM.

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BY ADVS. SMT. N.SHOBHA R1 BY SRI.K.SHRIHARI RAO R2 BY SRI. SANAL P. RAJ, PUBLIC PROSECUTOR

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THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 21.05.2024, THE COURT ON 23.05.2024 DELIVERED THE FOLLOWING:

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Crl. Appeal No. 1092/2007

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JOHNSON JOHN, J.

Crl. Appeal No. 1092 of 2007

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-------------------------------------------------------Dated this the 23^rd day of May, 2024.

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JUDGMENT

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This appeal is filed against the judgment dated 20.09.2006 in Crl. Appeal No. 294 of 2005 of the II Additional Sessions Judge, Palakkad, whereby the judgment dated 26.05.2005 of the Judicial First Class Magistrate-II, Palakkad in S.T. No. 6079 of 2003 is set aside and the first respondent/accused was found not guilty of the offence under Section 138 of the Negotiable Instruments Act, 1881 (for short ‘NI Act’) and acquitted.

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The appellant is the complainant. The case of the complainant firm is that a loan of Rs.70,000/- was advanced by the complainant to the accused in furtherance of a hire purchase agreement on 07.03.2001 and towards part payment of the liability, the accused issued cheque dated 25.09.2003 for Rs. 35960/- and when the complainant presented the cheque for collection, the same was dishonoured as per memo dated 13.10.2003 with the endorsement ‘refer to drawer’ and in spite of issuance of statutory notice, the accused failed to pay the cheque amount.

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Crl. Appeal No. 1092/2007

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In the trial court, from the side of the complainant, PW1 was examined and Exhibits P1 to P7 were marked and no evidence adduced from the side of the accused. After considering the oral and documentary evidence on record and after hearing both sides, the trial court found the accused guilty of the offence under Section 138 of the NI Act and sentenced him to undergo simple imprisonment for 3 months and to pay a compensation of Rs.26,000/- and in default of payment of compensation, to undergo simple imprisonment for one month.

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Against the trial court judgment, the accused filed Crl. Appeal No. 294 of 2005 and as per the impugned judgment dated 20.9.2006, it was found that the complainant failed to prove the existence of a legally recoverable debt from the side of the accused and that PW1, the power of attorney holder of the complainant, was not able to depose regarding the entire transactions between the complainant and the accused in connection with the issuance of the cheque and that the complainant also failed to produce the accounts in connection with the transaction and that the accused has succeeded in rebutting the statutory presumptions in favour of the complainant and hence, the accused was acquitted of the offence under Section 138 of the NI Act.

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Heard Sri. K.P. Balagopal, the learned counsel for the appellant, Sri. K. Srihari Rao, the learned counsel for the first respondent

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Crl. Appeal No. 1092/2007

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and Sri. Sanal P. Raj, the learned Public Prosecutor and perused the records.

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The learned counsel for the appellant argued that the issuance of the cheque and the signature are not disputed and the finding in the impugned judgment that the complainant has failed to prove the existence of a legally recoverable debt from the side of the accused to the complainant, is erroneous and against the evidence on record.

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But, the learned counsel for the first respondent/accused argued that PW1, the power of attorney holder of the complainant has clearly admitted in cross examination that Exhibit D1 is a statutory notice issued from the side of the complainant to the accused in connection with the dishonour of another cheque relating to the same transaction and PW1 also admitted that he is not in a position to say under what circumstance the complainant issued Exhibit D1 notice to the accused and also regarding the entire transaction between the accused and the complainant and therefore, there is no valid ground to interfere with the impugned judgment.

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A perusal of the complaint shows that the specific case of the complainant is that the complainant has advanced a loan of Rs.70,000/to the accused in furtherance of a hire purchase agreement dated 07.03.2001 and that Exhibit P2 cheque was issued by the accused

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Crl. Appeal No. 1092/2007 : 5 :

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towards part payment. But, there is nothing in Exhibit P7 hire purchase agreement to show that the complainant advanced a loan of Rs.70,000/to the accused. A perusal of Exhibit P7 shows that as per the terms and conditions in Exhibit P7, hire purchase agreement, the vehicle shown in A schedule of the agreement was taken on hire by the accused from the complainant, who is the owner of the vehicle agreeing to pay the rent specified in the B schedule of the agreement for a term of 15 months from 07.03.2001 onwards. There is nothing in the complaint or the chief affidavit of PW1 as to the date from which the accused committed default in the payment of the rent and what exactly is the amount due from the accused to the complainant as per Exhibit P7, hire purchase agreement.

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A perusal of Exhibit D1 notice dated 08.10.2002 admittedly issued for and on behalf of the complainant to the accused, shows that the said notice is also with reference to a cheque said to be issued by the accused to the complainant in connection with Exhibit P7, hire purchase agreement, dated 07.03.2001. Even though PW1 has initially stated in cross examination that the accused has not issued any cheque to the complainant prior to Exhibit P2 cheque and that the complainant has not initiated any legal action against the accused before this case, he subsequently admitted that Exhibit D1 notice is issued for and on behalf of the complainant to the accused. However, PW1 would say that

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he is not in a position to say under what circumstance, the complainant issued Exhibit D1 notice to the accused and he is also not in a position to depose regarding the entire matters connected with the transaction between the accused and the complainant. The evidence of PW1 in cross examination shows that the complainant is maintaining accounts in connection with Exhibit P7, hire purchase agreement.

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It cannot be disputed that the power of attorney holder cannot depose regarding the matters which are known only to the complainant and that he can depose only regarding the matters in which he has personal knowledge. Since PW1 has categorically admitted in cross examination that he is not in a position to depose regarding the entire matters relating to the transaction between the accused and the complainant in connection with the issuance of Exhibit P2 cheque and that he is not in a position to depose under what circumstance the complainant has issued Exhibit D1 notice to the accused demanding payment of another cheque relating to the same transaction and as to what action was initiated against the accused on the basis of Exhibit D1 notice, I find no reason to disagree with the finding in the impugned judgment that the complainant has not succeeded in adducing satisfactory evidence regarding the actual transaction between the accused and the complainant in connection with the issuance of Exhibit P2 cheque.

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It is pertinent to note that in spite of the order in Crl. M.P. No.. 5017 of 2004 under Section 91 Cr.P.C., the complainant has not produced the statement of accounts relating to Exhibit P7, hire purchase agreement, between the accused and the complainant. It is well settled that the standard of proof which is required from the accused to rebut the statutory presumption under Sections 118 and 139 of NI Act is preponderance of probabilities and that the accused is not required to prove his case beyond reasonable doubt. The standard of proof, in order to rebut the statutory presumption, can be inferred from the materials on record and circumstantial evidence.

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In Bharat Barrel & Drum Mfg. Co. v. Amin Chand Payrelal

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[(1999) 3 SCC 35], the Honourable Supreme Court held that the non existence of consideration for the cheque can be proved by raising a probable defence and if it is shown that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the complainant.

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In Harbhajan Singh v. State of Punjab (AIR 1966 SC

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97), the Honourable Supreme Court held that the onus on an accused person might well be compared to the onus on a party in civil proceedings, and just as in civil proceedings the court trying an issue makes its decision by adopting the test of probabilities

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The Honourable Supreme Court considered the nature of the standard of proof required for rebutting the presumption under Section 139 of the Negotiable Instruments Act in M.S.Narayana Menon v. State of Kerala (2006 (6) SCC 39), and it was held that if some material is brought on record consistent with the innocence of the accused, which may reasonably be true, even though it is not positively proved to be true, the accused would be entitled to acquittal.

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The Honourable Supreme Court in Basalingappa v. Mudibasappa [(2019) 5 SCC 418] summarised the principles of law governing presumptions under Sections 118(a) and 139 of the NI Act in the following manner:

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(i) Once the execution of cheque is admitted S.139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability. (ii) The presumption under S.139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.

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(iii) To rebut the presumption, it is open for the accused to rely on evidence led by him or accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the

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parties but also by reference to the circumstances upon which they rely.

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(iv) That it is not necessary for the accused to come in the witness box in support of his defence, S.139 imposed an evidentiary burden and not a persuasive burden.

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A perusal of the complaint and the evidence of PW1 in chief examination clearly shows that the nature of the transaction alleged in the complaint and the chief affidavit of PW1 does not tally with the nature of the transaction mentioned in Exhibit P7, hire purchase agreement. PW1 has categorically admitted in cross examination that he is not in a position to depose regarding the entire matters in connection with the transactions between the accused and the complainant and he is also not in a position to say under what circumstance, the complainant issued Exhibit D1 notice to the accused and as to whether any legal proceedings was initiated against the accused by the complainant on the basis of Exhibit D1 notice.

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The complainant has also not produced the statement of accounts maintained in connection with Exhibit P7, hire purchase agreement, and the evidence of PW1 in cross examination shows that the complainant has engaged representatives for collecting instalments and during the relevant period, Sreedaran and Pushpan were the

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representatives in charge of Kannur and that the complainant used to issue receipts only when the representatives entrust the amount in the office of the complainant and therefore, merely because receipt is not issued, it cannot be said that the party has not made payments. In this connection, it is pertinent to note that the specific case of the accused is that he has paid the entire instalments to the complainant as per Exhibit P7, hire purchase agreement and that no amount is due from him to the complainant in that connection.

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On a careful re-appreciation of the entire evidence, I find no reason to disagree with the finding in the impugned judgment that the accused has succeeded in rebutting the statutory presumptions in favour of the complainant and therefore, this appeal, which is devoid of merit, is liable to be dismissed.

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In the result, this appeal is dismissed.

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sd/- JOHNSON JOHN, JUDGE.

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M/S.Vaishnav Securities v. Sasi T. and Another

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M/S.Vaishnav Securities v. Sasi T. and Another

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